Egypt: Suez Cement reports 18.3% rise in 3Q14 EBITDA

Suez Cement Group of Companies (SCGC) reported a 48.2 per cent increase in revenues for the third quarter of this year. EBITDA during the three-month period rose by 18.3 per cent and net profit after non-controlling interest was up by 40 per cent.

The Italcementi group company said that for the nine months to the end of September 2014, sales increased 30 per cent while recurring EBITDA was 7.8 per cent higher compared to the same period of 2013. However, higher corporate income taxes coupled with the absence of foreign exchange gains led to a 14.6 per cent decline in net profit after non-controlling interest.

SCGC said strong revenue gains “largely reflected the cement price evolution which has been driven by an unprecedented surge in production costs and shortage of production.” Clinker production was reduced due to severe energy shortages which impacted SCGC’s companies to varying degrees. Torah Cement was the most affected and led to the costly import of clinker to satisfy growing demand. In addition, energy costs rose 25-35 per cent. Energy-related shutdowns affected more than 40 per cent of Suez Cement’s industrial capacity. The implementation of energy efficiency plans and the growing use of alternative fuels helped contain the drop in production and limited the impact of clinker imports on production costs.

On the outlook for Egyptian cement demand, SCGC believes that the domestic construction industry’s recovery will attract new investment encouraged by regained government stability and the implementation of several large-scale national projects.

Power cuts and fuel shortages are likely to remain a major issue for local producers and as such, SCGC plans to diversify its energy mix with waste, petcoke and coal are underway. Last month, the company started operational test runs for coal usage for one of its group plants in Kattameya, while the Suez plant will follow suit by the end of the year.